Best Balance Transfer Credit Cards in Canada

How Do Balance Transfer Credit Cards Work?

A typical balance transfer credit card charges little to no interest on balances transferred from other credit cards, for a specified duration. The interest rate can be as low as 0%, and the promotional period may extend to up to 12 months. How much you end up paying as fees depend on the card you get. You may use a single balance transfer card to transfer balances from multiple cards.

How to Choose The Best Balance Transfer Credit Card for You

When searching for a lower balance transfer credit card, be sure to assess these three key features:

1. The balance transfer charges
2. The rate of interest
3. The span of time that the promotion will continue

You do not want to be paying 3% in charges just to attain the concession of a zero percent bid. But simultaneously, you do not want to settle for a short-term promotional period, one which will not give you sufficient time to completely pay off your debts, before the standard interest kicks in.

Should You Get a Balance Transfer Credit Card?

Getting a balance transfer credit card might work well for you if you wish to aggressively repay your credit card debt. By shifting your debt to a card that comes with a lower interest rate, you end up repaying lesser money in the form of interest.

If the amount you owe is significant, the money you save can be considered too, especially if you repay the entire amount during the promotional period. By consolidating your existing credit card debt, you only need to worry about one repayment. Besides, all or most of the money you repay goes toward reducing the principal.

The Interest Rate Promotion

When you look for balance transfer credit cards in Canada, you will typically find ones that charge 0% to 1.99% interest on transferred balances for a predetermined time period. This balance transfer introductory rate may stay in place for 6 to 12 months. Once the promotional period ends, the interest rate automatically switches to the card’s regular APR.

Fees You Need to Pay

Finding balance transfer credit cards that do not charge any annual fees is fairly easy. Some cards charge annual fees, which may vary from $20 to $40. You might need to pay a balance transfer fee, which, in some cases, might be as high as 3% of the transferred balance.

A combination of no annual fees, no balance transfer fees, a 0% intro APR, and a 12-month intro period is hard to find.

Interest Rates

While you might benefit through your new card’s promotional balance transfer rate, you still need to pay attention to the card’s purchase rate and cash advance rate. The interest rate on purchases typically varies from 8.99% to 19.99%. The interest rate that applies on cash advances in usually higher, and can go up to 24.99%. Bear in mind that the purchase rate applies on any outstanding balances from balance transfers at the end of the promotional period.

Transfer Limit

The maximum balance you may transfer to your new credit card essentially depends on the available credit limit. While some cards let you transfer balances up to the full approved limit, some others cap it as a percentage of the card’s credit limit. This may vary from 50% to 95% of your card’s available credit limit.

Eligibility Criteria

When looking for balance transfer credit cards, expect card providers to require a minimum income of at least $80,000 per year for individuals, or $150,000 per year for families. This may be more in case of some cards. However, there are cards that come with no minimum requirements at all. Instead, they pay more attention to your credit score, which should ideally be fair to good.